Arbitration and Blockchain in the Banking and Financing Sector - WAMR 2018 - Vol. 12, No. 2
Duarte G. Henriques is a lawyer and arbitrator in Lisbon, Portugal. He is a listed arbitrator in several institutions, including the China International Economic and Trade Arbitration Commission, the Hong Kong International Arbitration Centre, and the World Intellectual Property Organisation (WIPO).
Originally from World Arbitration and Mediation Review
1. New blockchain technologies are invading the banking and financing industries at an unstoppable pace. Created as shared digital databases, and impermissible to any intrusion or unauthorised modification, these technologies serve to centralise record-keeping systems based on distributed ledger platforms. Developed as a technology that allows the generation and growth of transactions attached to a string of blocks, unsusceptible to adulteration, blockchain has been the basis for the offering of cryptocurrencies, such as Ethereum and Bitcoin.
It is a secured means of operating and recording transactions that reduces not only the intervention of numerous human processes and documentation but also the costs and time attached to those operations. This technology allows the users, for instance, to make transfers of currencies in a blink of an eye, thus cutting off the time and expenses associated with regular banking transactions.
The use of blockchain is beyond our imagination. Blockchain technologies are being developed to allow the trace of goods and services, and to allow access to every possible detail of any given transaction or service. Ranging from medical data management to land titling, the capabilities of this new technology stretch the horizon of the economic agents and the economy as a whole. To give an example, IBM announced that it is working with Nestle, Unilever and Walmart in joining efforts to reduce food contamination by using blockchain that “would enable food suppliers to source information about the origin, condition and movement of food, and to trace contaminated produce in mere seconds.” Essentially, virtually every transaction can be processed through blockchain technology.
In the words of Marco Iansiti and Karim Lakhani, “blockchain will become the foundation for the way that all digital contracts, transactions and records will be executed and stored in future.”
2. For that reason, it is worth providing a broad description of the fundamentals of this system.
10. The questions that follows are if and subsequently how can arbitration be “imbedded” in the blockchain technology and, thus, in the smart contracts that are reaching the banking and financing industry? The answers are already provided.